Breakup sex

Today I see people whose politics I largely share getting upset about things. Here are Briahna Joy Gray and David Sirota, upset that John Kasich may play a role in the Democratic National Convention. Here is Anand Giridharadas grappling with how to welcome the energy and support of the “Lincoln Project” without ceding power to the very same people who brought us the Iraq War, torture, and predatory mortgages and financial fraud.

The metaphor for how I think that “we” (for a suitably nebulous we) should deal with the 2020 election is “breakup sex”.

Our current relationship with the Democratic Party is intolerable. The people who run the institution do not share our values, at least not in any way that matches the urgency of the catastrophe our world has become. We’ve tried for two Presidential election cycles to reform the party from the inside, using the primary process, and not succeeded, both for reasons fair and foul. Yet the pathology of our first-past-the-post electoral system and the logic of Duverger’s tendency means it would harmful to do the natural thing and form our own political party. Under electoral systems like ours (which it should be among our highest priorities to change) splitting a broad coalition disempowers the entire coalition, handing elections and power to people whose interests and values are so far from our own we would never have been anywhere near a coalition with them. Within the Democratic Party our values are undermined, coopted, sacrificed on the alter of a cynical realism that the well-remunerated realists quietly prefer. If we split from the Democratic Party, we hand power to a coalition that is, at the moment, an unabashedly fascist death cult. Things are tough all over. This is intolerable. We have to find a way out.

I think there is a way out. A fair number of us, described sometimes as “Bernie or bust”, argue that we should withhold our support from the Democratic Party, despite electoral realities, unless they earn our support with candidates and platforms that represent us. Sometimes this is taken a principled stand, to be taken regardless of consequence. But often it is justified in game-theoretical terms: If institutional Democrats know that we are trapped, that we will always hold our noses and vote with them, then we will have no leverage in the party. We have to demonstrate a willingness to accept the short-term risk of spoiling elections in order, over the longer term, to gain bargaining power within the Democratic coalition so that our values and interests actually get represented.

There is a lot to be said for this view, but it is kneecapped when it is put into practice on individualized, atomized terms. Most of us, compelled by the logic of negative partisanship, hold our noses and vote for the “corporate Democrat” who we expect will betray us, but who will probably not murder us like the other guy might. Others vote for Jill Stein or Howie Hawkins, or don’t show up at the polls. The inconsistency dilutes the potential effectiveness of the strategy. If the goal is actually to wield power, our withholding or supplying votes must be a matter of coordinated, collective action rather than individualized expressive choice. We need a union that can credibly threaten to strike, not individuals some of whom rage quit.

So, breakup sex. I think, in this year of our lord 2020, we should actively, enthusiastically, passionately support the Democratic Party and the prototype institutional Democrat who leads its ticket. They always try to convince us that letting the other team win would be the end of the world, but this year the horde of rabid predators is pretty visible while they are crying wolf. As soon as the election has passed, I think we should form a distinct organization that would not be a political party in the sense of participating in our country’s deeply flawed public primary process, but that would, like a political party, sometimes moot its own candidates for public office and help get them placed on ballots (whether as organization representatives or notional independents). Sometimes is an important word in that description. Most of the time, it hopefully would not. The organization would simply endorse the Democratic party candidate, keeping whole the not-Republican coalition. But, if a high (supermajority) threshold of the membership decides that the Democrat would not represent our values effectively, that the risk of spoiling the election is acceptable given whoever the Republican would be and is outweighed by the possibility our better candidate might win, then we would run that candidate and organize on their behalf with energy and unconflicted enthusiasm. Defecting from the Democratic Party, when it makes sense, makes much more sense as a collective rather than individual choice.

This organization might only rarely run candidates but still have a salutary effect on our politics. A credible threat that the social democratic wing of the party might defect would change the kind of candidates the party would nominate under its everpresent “electability” fetish. The existence of such an organization would also incentivize Republicans not to nominate, say, pathological narcissists with inchoate tendencies towards authoritarianism and racial hierarchy. Republicans will understand that, if they nominate someone sufficiently mild and tweedle-dee-ish next to what might be portrayed as a corporate-Democrat tweedle-dum, the social democratic wing of the Democratic coalition might risk a split and hand them an advantage. The existence of a union of social democratic voters would create incentives for the Democratic Party to become more social-democratic, and for the Republican party to become saner. It’s win-win-win.

This is, of course, a second-best solution. Replacing our terrible first-past-the-post electoral system with sane alternatives would enable a diversity of proper political parties to contest elections on equal terms. But this is something we can just do, long before an uphill struggle can be won to get incumbent politicians to reform the system that exalts them.

We should start to build this organization, just after the election. In the meantime, until then, I think we should passionately support Joe Biden and whatever motherfucker has a D next to their name on November’s ballot. My view is that it’s not worth the trouble to be coy, to withhold support conditional on platform commitments or John Kasich not marring the Democrats’ stage. During a Biden administration, there will be a huge battle over who must be betrayed — corporations and donors, or us. For now, the best way to wage that fight is to be an indispensable part of this election’s coalition. Beginning in November 4th, we organize to credibly threaten to take our indispensable selves elsewhere if it is us who is betrayed.

We’re at the point in the relationship where I think we do have to leave, sort of. We can no longer remain an informal, disorganized “wing” of the Democratic Party contesting bizarrely constituted primaries under institutions whose leaders oppose and outmaneuver us. But we need to decamp smartly, in a way that strengthens the influence of our values rather than uselessly spoiling elections. And before we go, this election cycle, the sex should be unreserved and hot. Biden 2020, baby.

Social democracy and freedom

In 1962, Milton Friedman famously argued that liberal capitalism and political freedom go together, they are mutually reinforcing. Nowadays, for a lot of us Milton Friedman has become a kind of bogeyman, the false prophet of a catastrophic social experiment that has, after decades, left us immiserated and divided. But I have some sympathy. The basic structure of the argument is that however democratic a powerful central government might purport to be, it is a danger to freedom. Decentralized power plus change enacted via mutually beneficial exchange are more likely to produce positive progress and — perhaps more importantly — are less likely to feature some powerful class that, through error or malevolence, harms or abridges the rights and liberties of disfavored groups. Friedman writes:

Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.

Capitalism and Freedom was written in the heyday of the Kuznets curve, which posited that extreme inequality was self-correcting and had largely already self-corrected in modern economies. Friedman celebrated moderate inequality, on the theory that a world with many captains of industry would have many and diverse philanthropists to whom partisans of unpopular causes could make their case and find sponsorship. The logic of the argument rests on the notion that capitalism preserves political diversity that cuts across the structure of wealth and power, so that any partisan, regardless of her politics, could find communities willing and able to celebrate or at least tolerate her, within which she could secure some livelihood and position.

There is an obvious critique of this from the left. Political diversity won’t cut across structures of wealth and power evenly. Humans, including fabulously wealthy humans, are quirky, so sure, there’ll be some Friedrich Engelses and Nick Hanauers. But the winners of an economic game by and large will promote views that celebrate and entrench the game they continually win. Quantities (of money) matter, and there’s lots more scope to make a living at Mercatus than at People’s Policy Project, for partisans willing to adjust their politics accordingly. Capitalism, then, buys the appearance of political diversity (every voice is in the room!), but puts a fat thumb on the scale for the interests of the wealthy and powerful.

Interestingly, though, despite (really because of) decades of Friedman-justified nonintervention into the operation of capitalist markets, the most strident complaints of nonfreedom now come from not from the economic left but the social right. Is “cancel culture” tyranny or itself free speech? Bret Stephens is a fun figure in this debate, because he has a history both of trying to get people disciplined for their speech and of complaining that conformism to the doctrines of “woke” social liberalism are grave threats to freedom of expression. Here’s Stephens today:

The more serious problem today comes from the left: from liberal elites who, when tested, lack the courage of their liberal convictions; from so-called progressives whose core convictions were never liberal to begin with; from administrative types at nonprofits and corporations who, with only vague convictions of their own, don’t want to be on the wrong side of a P.R. headache.

This has been the great cultural story of the last few years. It is typified by incidents such as The New Yorker’s David Remnick thinking it would be a good idea to interview Steve Bannon for the magazine’s annual festival — until a Twitter mob and some members of his own staff decided otherwise. Or by The Washington Post devoting 3,000 words to destroying the life of a private person of no particular note because in 2018 she wore blackface, with ironic intent, at a Halloween party. Or by big corporations pulling ads from Facebook while demanding the company do more to censor forms of speech they deem impermissible.

These stories matter because an idea is at risk. That’s the idea that people who cannot speak freely will not be able to think clearly, and that no society can long flourish when contrarians are treated as heretics.

That idea, old as Socrates, formerly had powerful institutional defenders, especially in the form of universities, news media, book publishers, free-speech groups and major philanthropies.

But those defenders are, on account of one excuse or another, capitulating to people who claim free speech for themselves (but not for others), who believe all the old patriarchal hierarchies must go (so that new “intersectional” hierarchies may arise), who are in a perpetual fervor to rewrite the past (all the better to control the future), and who demand cringing public apologies from those who have sinned against an ever-more radical ideological standard (while those apologies won’t save them from being fired).

David Karpf (whom Stephens tried to have disciplined for a mean joke) responds on Twitter:

This is a vision of free speech that collapses under minimal Socratic scrutiny. It’s a Freedom of speech that demands a safe space from all counterspeech — free speech for me but not for thee.

FedEx telling Dan Snyder to change the damn name [of the Washington Redskins] IS speech.

People pressuring FedEx to tell Snyder this are engaging in speech as well.

Protest actions are acts of speech, even if those protest actions are aimed at people who Bret Stephens identifies with.

That’s the rotten core of every “campus cancel culture” controversy.

You have the right to speak. You don’t have a right to a (paid) platform. And if people think your speech is bad, offensive, harmful, or dangerous, then THEY have just as much right to say speak as well.

This is an insight so mundane that it barely deserves mentioning. Free speech applies to everyone, even people who criticize Bret.

So who is right here? I say Milton Friedman is. “Free speech” stops being real, stops being a practicable ideal, once the consequences of unpopular expression are so great you’ll be banished from the communities you value and unable to earn a decent living. Both the woke and their discontents should be able to speak their piece, both a controversial talk and the angry protest it accumulates are important components of free speech. We want a society where — in practice, not just as a formal, legalistic matter — the public sphere can accommodate a wide range of expression, some of which each of us will find abhorrent.

But Friedman’s conjecture that capitalism plus a light-touch state would be an effective way to ensure this state of affairs was wrong. Because it was never really “capitalism”, in his argument, that protected political freedom. It was decentralization, a broad distribution of wealth and power largely uncorrelated with political commitments. And what we’ve discovered (as any Marxist would have predicted) is that laissez-faire-ish capitalism doesn’t deliver that at all. Instead it delivers accumulation and scarcity, both at individual and institutional levels. At an individual level, the Kuznet’s curve that was fashionable when Friedman wrote, that suggested inequality was a problem of the past under industrial capitalism, has completely broken down. We are back in the Gilded Age, or worse, in terms of inequality. If the consequence of unpopular speech is that a person falls from the upper-middle to something below the middle of the income distribution, that would have been tolerable in 1962 in a way it is not tolerable now. At an institutional level, the economy has consolidated since 1962. The elites who manage the winners of that consolidation and who benefit from entrenched monopoly have of necessity developed a strategies to defend the winner-take-all economy from democratic contestation. One strategy contemporary robber barrons have converged upon is to rebrand themselves as “progressive”, as forces of social good. They cynically and collectively choose what qualifies as virtuous in social affairs, and they garb themselves and give philanthropically to immunize themselves from attacks on their dominant and entrenched economic positions. Today it is Black Lives Matter. A decade ago it was “transformation of the world economy lift[ing] four people in China and India out of poverty and into the middle class” for every American it kicks out, which doesn’t play well anymore in Western democracies. It changes with the wind, Davos is like a fashion magazine. But at any given moment, there must be great and virtuous causes whose pursuit is not antithetical to continued domination by the already dominant. Dominant firms will brook no public dissent from the moment’s religion, as preaching that religion is essential to bewildering and misdirecting an immiserated public whose democratic power could, in theory, undo them.

It’s a bit, um, rich that Bret Stephens would complain about this from his perch at The New York Times, whose dominance of print news is unprecedented and growing. But perhaps it is understandable that he feels the chill. Elite positions like his are an ever-shrinking a game of musical chairs, lots of us would love his life and he wouldn’t love ours. If he (like his editor) were kicked out in a great public scandal, it’s not at all clear that he would land so well. Among elites, the stakes of this game of dangerous speech and righteous counterspeech have become enormously high. (Just ask Steve Salaita, Bret.) You can lose the sort of incomes most of us will never enjoy, and the sort of social place most of us will never experience, if your friends decide they have to sacrifice you in the name of the corporate virtue upon which you collectively depend.

So for those of us who really favor free expression, what is to be done? It’s not enough to adopt a legalistic, First Amendment version that shrugs when private actors censor, ban, and risk people’s livelihoods. It’s pure surrender to defer to Popper’s “paradox of tolerance” and say that it’s cool there’s an ever-shifting set of boundaries beyond which expression and therefore eventually thought can legitimately be punished, because some ideas are too dangerous, free society is too weak to tolerate them.

We should return to the wisdom of Milton Friedman, that political freedom is a structural matter, inextricable from economic arrangements. Friedman was wrong that light-touch capitalism would durably enshrine and protect the kind of structure conducive to political freedom (ht Chris Mealy). He probably was not wrong that versions of socialism that repose economic power in a unified economic hierarchy would be hostile to political freedom. Instead what is required is some system in which the economic stakes of unpopular speech are unlikely to be so horrible, because the distance between lives of the conformist elite and unwashed others is not so great. What is required is a system under which economic power is not consolidated among a few firms with a shared interest in sheltering their dominance, but where instead a diversity of thriving actors ensures that any weirdo can find prosperous communities that will at least tolerate, if not agree with, her views. Such a system might look a lot like capitalism with limited government, but the limits of government would expand somewhat from protecting property and enforcing contracts to providing generous universal (therefore nondiscriminatory) social benefits, raising the floor onto which one might fear to fall for speaking your mind. Such a system might design its corporate and tax law explicitly to promote competition and limit scale (rather than narrowly proscribing a few illegitimate tactics or effects for clever lawyers to work around) so that economic power is affirmatively widely distributed.

If there’s a name for this system, almost uniquely consistent with durable political freedom, I think it would be “social democracy”.

Update History:

  • 5-July-2020, 11:35 p.m. EDT: “…middle class’ for every American it kicks out, which…”; “…some ideas are too dangerous, and free society is too weak to tolerate them.”; “He probably is was not wrong that versions…”
  • 7-July-2020, 2:30 p.m. EDT: “banished from the communities you value and be unable to earn a decent living”
  • 13-July-2020, 2:30 p.m. EDT: “…lots of us would love a his life and he wouldn’t love ours…” (thanks Christian Peel)

Pandemic Diary 2020-07-02: Thymus theories

This post is pure conjecture. I’m not an immunologist or virologist or doctor, nor am I particularly informed in any of those fields. Still, I’ve been obsessed to the point of paralysis by the COVID pandemic, and I try to make sense of things. I offer this in hopes that people more informed than me will tell me why it’s full of shit, not because you should expect it should be right. (And, though it’s all probably wrong, I don’t think these ideas are original. I’m just giving order to thoughts gleaned from conversations in the ether.)

So. Here’s the “theory”. Recently evidence has emerged that T-cells play an important role in COVID recovery and immunity (ht Andy Slavitt). T-cells (as I understand things!) comprise a distinct though related line of defense from antibodies and the B-cells that produce those. The adaptive immune system, in my imagination, is like a mind that works to sense and remember invaders, and produce a response that must be carefully calibrated to repel them without causing too much “collateral damage” to the body. T-cells have a variety of roles in that mind, serving as repositories of memory and helping to coordinate the antibody response. But they also function as killers.

While antibodies mark and disable invaders floating around in your blood, killer T-cells “look inside” the cells of your body for untoward activity that might indicate infection. (Our cells have a kind of billboard upon which they display information about what they are up to, for these cells to observe.) When these killer T-cells decide they have sufficient evidence that a cell has gone rogue, they induce the cell to kill itself. This is a rough sort of justice. Antibodies are officer friendly, attacking bad guys but leaving the host unharmed. Killer T-cells are secret police, disappearing cells whose continued survival they deem not in the interest of the community. Killer T-cells attack not outsiders or invaders, but your own tissue, as a necessary evil to root out infection.

White blood cells are developed into T-cells by an organ called the thymus (after which they are named). One a priori clue that T-cells might have some role in COVID-19 is the age profile of the thymus. The thymus is most active in young children. It’s function declines with age, particularly after puberty, when it begins to “involute” or atrophy. While the thymus functions to some degree even in the elderly, it decays continuous over our lifespans, getting worse and worse. In male rodents, castration can slow this puberty-accelerated atrophy, and interestingly there’s evidence that human castrati have unusual longevity. (I still don’t recommend the procedure.)

Young children do very well with COVID-19, while the risk of a difficult outcome increases monotonically with age. This seems suggestive that the thymus and its T-cells might have a role in repelling the disease.

Two other pieces of evidence seem to fit. A recent French study found that asymptomatic close contacts of infected individuals often showed a T-cell response with no detectable antibody response in blood (ht TWiV, a great podcast!) What this might mean is that, in the very best kind of response to the infection, where you don’t get sick at all, your T-cells just quickly dispatch infected cells without much of an assist from antibodies at all. A Chinese study comparing the antibody response between asymptomatic and clinically-ill infecteds found, perhaps counterintuitively, a stronger antibody response among the sick than among those with no symptoms. Again, this seems consistent with the idea that a quick T-cell response is what’s most capable of forestalling the disease. Antibodies, in this conjecture, represent a second-best response, appearing if the T-cell response fails to make quick enough work of the infection.

It’s all about kinetics, about speed, in this “theory”. It’s a race. Bad outcomes come from a too-slow T-cell response. If your immune system develops COVID-19-attacking T-cells too slowly, you get a big but perhaps not-super-effective antibody response because nothing else is restraining the infection. Eventually, even older, slower thymuses do produce, but by the time they do, the infection may have run wild, so your own killer T-cells may end up deciding to attack a whole lot of your own tissue. This seems consistent with the observation that, once the infection becomes severe, immunosuppressants help prevent bad outcomes.

So that’s the conjecture, definitely overfitted to stuff I hear, probably bullshit, for what it’s worth.

What would be the implications if there were something to this? On the optimistic side, if the French study generalizes and an effective T-cell response often forestalls a discernible antibody response, that’s “immunity not reflected by serology“, which could mean that the infection fatality rates we’ve estimated from serology studies are overstated, and the disease may not be as commonly fatal as we think. On the less optimistic side, it means that an observed antibody response might not be strong evidence of vaccine effectiveness (e.g. here). It also calls into question the likelihood that convalescent plasma therapy and monoclonal antibodies will be great. Obviously, I hope these less happy implications are wrong.

Under this conjecture, if there were some way to accelerate thymus function or reverse its deceleration, that might be useful as a prophylactic. If thymus health can be evaluated more individually than “it gets worse with age”, maybe that would predict risk of a hard disease course. But it’s no great insight that bad health of an organ of the immune system would predict difficulty at repelling an infection, or that improving the health of such an organ might help. If there are thymus-stimulative treatments out there, probably they are already being tried.

These “thymus theories” are how I’m currently, tentatively, making sense of things for myself. But I’m not sure they are right, and even to the degree they might be, I’m not sure they buy us very much.

Complementary currencies for municipal finance

It is an act of criminal malfeasance that the United States’ federal government has not eased the tremendous fiscal pressure on states and municipalities, enabling them to prioritize public health and long-term economic wealth over immediate maintenance of tax revenue. Misgovernance of the United States presently rises to the level of war crime (and that is not just Donald Trump).

A recent article by Rohan Grey, aptly titled Monetary Resilience, highlights one way this national misgovernance might be circumvented. Municipalities could issue complementary currencies:

[S]ome of the more historically successful complementary currencies explicitly adopted the fiscal logic of public monetary regimes, anchoring their value in the acceptability in payment of local taxes, fines, or other legal obligations. This anchor reduced the local currency’s degree of autonomy and independence from the public monetary system, but in exchange provided it with greater legitimacy and stability with respect to its underlying value.

Such an approach allows local currencies to emerge organically from below, and then receive public support from above through the granting of tax-receivable status. This dynamic, in turn, points towards the possibility of an alternative hierarchy of money, in which banks and other private financial institutions responsible for shaping and directing investment are replaced by nested community currencies, operating in accordance with common principles of ecological, economic, and social justice.

Grey here envisions municipalities blessing or adopting privately founded complementary currencies, but there is no reason why local governments couldn’t start up such currencies themselves. Suppose a municipality issued basically a gift card with which certain taxes and fees could be paid at a discount. In particular, suppose that only business taxes and fees are granted this discount, but gift card balances are sold just to individuals and in limited amounts. Suppose that local businesses can apply for “merchant accounts” with respect to these gift cards, accepting payment from customers in gift card dollars just as they might from a debit card. Businesses would be eager to receive this local scrip, at least until this revenue is enough to cover all of their tax obligations eligible for the discount. They would encourage customers to pay in the scrip, whether by sharing the tax discount directly, or by offering other inducements. The overall demand inspired by the tax discount would be more than consumer facing business’ tax obligations. These businesses’ local suppliers will also prefer to be paid in scrip, and will share inducements with business customers, creating demand beyond each firm’s own tax bill. Municipalities themselves can creatively design inducement for residents to maintain balances in scrip. Perhaps residents get 10% off museums, public transit, etc if they can demonstrate a threshold balance, with a scan of a QR code on an app. There could be some (modest) VIP amenities for high balances. Perhaps balances pay interest on themselves, at a rate lower than what municipalities have to pay to float bonds but higher than what ordinary consumers earn in bank savings accounts. To put a floor under its value and limit consumer risk, municipalities could stand ready to buy back the scrip, at a discount or with a moderate transaction fee to discourage redemption. However, the city’s tax and amenity schedule would be the fundamental driver of scrip demand.

Importantly, municipalities would retain control (by their management of merchant accounts) over to whom this scrip might be paid. Complementary currencies are historically deployed in the service of localism, of encouraging circular flow within a local economy rather than “leakage” into a more global economy. Municipalities have every interest in encouraging this sort of localism, which already they do to a certain degree via PR campaigns and small business subsidies. Should chains or national vendors have access to the local tax discount that receipt of the scrip enables? That would be a local government choice.

But besides the localism, the existence of these scrips would create a new option for municipalities, increasing fiscal resilience. During periods of great need, municipal governments could encourage an increase in the float of the currency, by adjusting the tax and amenity schedule, and also by appealing to community and local pride. These currencies could serve as small scale echoes of the “war bonds” that helped finance World War II.

There are lots of reasonable objections to this idea. Most obviously, in the United States, there is a Constitutional question. The Constitution grants Congress to power “[t]o coin Money, regulate the Value thereof” and explicitly prohibits states from “coin[ing] Money; emit[ting] Bills of Credit; mak[ing] any Thing but gold and silver Coin a Tender in Payment of Debts”. I am not enough of a lawyer to address this question fully, but two centuries later, states and municipalities emit all kinds of debt securities that are transferable with much less restriction than those described here to finance their operations. Our “complementary currencies” do not propose any new unit of account. Each local scrip would be denominated in US dollars. As Grey describes, these are “currencies” in the same way bank deposits might be “currencies”. They plug into the existing hierarchy of money for whose zenith the Constitution prescribes a monopoly. They do not compete with or seek to supplant state money.

More substantively, is localism a good thing? Localism is arguably what contemporary national monies were designed precisely to oppose. The proudest accomplishment of modern monetary systems is that bank monies trade at “par”. Payees in Pittsburgh accept funds from Paducah Bank in Kentucky as if they were the same as funds from Citibank in New York, reducing financial frictions to commerce at a distance that once upon a time were profound. But that achievement serves also as a kind of solvent, weakening once preferential ties between specific individuals and businesses, reshaping humans, in their roles of buyer and seller and investor, into creatures more like the abstract optimizers of neoclassical economics. “Civil society” is the name we give to dense, particular, reasonably stable networks of humans who interact and collaborate over time periods that outlast a mere transaction. Precisely because contemporary monetary systems work as designed, allowing each individual to optimize their choices as though the world is always new and every counterparty interchangeable, they undermine civil society, whose development and stability are founded on advantages that come from repetition and trust. Once upon a time, we all formed social networks as an inevitable side-effect of commerce. We visited the same few grocers and hardware stores. Our rolodexes filled with travel agents and insurance agents, people who, yes, were trying to sell us stuff, but who were also human experts we could phone up and chat with as a matter of course. Those kinds of “professional networks” are now decidedly upscale. For the rest of us there is Amazon and Expedia. We gained something in price and selection, but what did we lose?

As with most economic phenomena, the best solution is probably an interior one. A world without economic specialization and trade at national or even global scales would be much poorer than the world we have come to inhabit. Our forebears were right to seek to overcome the “natural” constraints on commerce across vast chasms of geography and trust. At the same time, there are real positive externalities to local commerce and exchange, in human community and civil society, and also (as we are painfully learning) in resilience. We should not abandon the hard-won institutions that enable large scale commerce, but we should supplement them with Pigouvian subsidies of localism and its extratransactional virtues. Where economies of scale and agglomeration render widely dispersed commerce genuinely superior, we should take advantage of that. But where such economies are small, or the advantages of scale are due to market power more than genuine efficiencies, we should encourage localism. The municipal complementary currencies proposed here tilt the scale towards localism, but probably too little. In our current world, big dominates, largely not due to inexorable efficiencies, but thanks to monopolized network effects and other forms of market power that we should work to oppose. Subsidies to localism create incentives to help do that.

To me, the most cutting critique of this proposal is that it is too little, too late. The United States is in a crisis, states and municipalities are throwing human bodies on the flame to sustain a trickle of tax revenue. Standing up institutions like this would take time, and managing them well, to promote useful commerce and achieve a fiscally meaningful float, would take much more time. I don’t know that we even survive in any form under which proposals like this don’t become utopian and archaic. As a human I feel like a tremendous failure, because I have ideas about how the world should be run, maybe even some good ones, but I have failed to develop and communicate them with the urgency that might have contributed, at least a small amount, to saving us. I hope I have another opportunity, that we all do.

National politicians of every party and stripe: Please provide fiscal support to states and localities now, and encourage them to prioritize public health and long-term prosperity over immediate-term economic activity. Please.

Update: Nathan Tankus has an excellent, much more historically informed, piece on tax-receivable, municipal crisis monies!

Update II: Not unusually, I was not particularly well-read on this idea before I deigned to write about it. In addition to Nathan Tankus’ excellent piece, please see Marshall Auerback on a US-centered discussion tax-receivable municipal currencies, and Paul Katz and Leandro Ferreira for a discussion of the remarkable town of Maricá, Brazil, and the use of its longstanding digital municipal currency, the mumbuca. (I’ve appended an old-school related link box below, and may add any other links that I come across without further updates here.)

Update III: John Evans suggests a reference to perhaps the most famous municipal money experiment, the “Miracle of Wörgl“. During the Great Depression, the Austrian town of Wörgl stimulated its economy by issuing not just a local scrip, but one subject to demurrage, meaning the value of the scrip declines the longer it is held, encouraging quick expenditure. This idea, which remains popular among economists today, is most famously associated with Silvio Gesell.

Update History:

  • 28-June-2020, 3:35 p.m. EDT: Add bold update re Nathan Tankus’ excellent piece.
  • 30-June-2020, 1:50 p.m. EDT: Add second update noting more relevant municipal currency pieces, and the related links box.
  • 30-June-2020, 2:25 p.m. EDT: Add third update re the “Miracle of Wörgl”, suggested by Jon Evans.
  • 30-June-2020, 7:05 p.m. EDT: “Silvi Silvio Gesell”


This post is obviously oversimplistic. Many of the idiocies I present here are, intentionally. All blog posts are wrong but I hope some are useful. This one is more of a thumbnail than usual, but I hope it is still useful.

One way to understand the United States’ political arrangement is that it has functioned to enable a kind of tacking. Tacking is a sailing maneuver that allows a seaman, by zig-zagging, to perform the daunting task of bringing a wind-driven boat upwind.

In one famous oversimplification, the American electorate tends socially conservative but economically left, while the American elite is socially liberal but “fiscally conservative” (i.e. economically right). Here’s a graph from Lee Drutman (via Karl Smith) of the 2016 electorate:

Although the strongest clusters are at the bottom left and center north, there are plenty of Americans in the category Paul Krugman described as “hardhats” (and, a bit ironically in retrospect, as missing from the political scene): socially conservative but economically left. Further, if you averaged the American electorate in the way that a voting system or political consultant might, if you collapsed it to a single point, it would sit in that quadrant — clearly to the economic left, socially center-ish but tilting conservative. “The United States is a center-right country” is a common oversimplification that is not only wrong but mostly useless. “Left but not woke” (which David Frum dubbed Bernie Sanders’ brand) is a better characterization of the heart of the US electorate, or at least it was as of 2016, before “The Great Awokening“.

Yet neither US political party’s messaging has historically been tailored to the top left quadrant in which the average (but not modal) American has lived. We have one party that bills itself as full-throatedly socially liberal and half-heartedly economically left, and another party that bills itself as full-throatedly on the economic right, but half heartedly socially conservative.

Donald Trump rose to power by taking this missing ground. He campaigned (although has not governed) from the economic left, talking about universal health care, protecting entitlements, and trillion-dollar infrastructure projects, and from a social right so unapologetic some of his copartisans denounced it as racist. It worked! Under the simple (very wrong) median-voter-theorem-ish logic under which the US political system is supposed to deliver moderation, both US parties should be messaging somewhere just north and substantially left of the center point of this graph. But that is not where either US party usually is.

However, if you factor in the shared preferences of elites who shape both parties’ political operations — professionals and donors — maybe the arrangement makes a bit more sense. If these players are not neutral operators trying to gain votes for their team, but interested actors whose bipartisan target sits (lonesomely!) in the bottom right of the graph, then you can see some sense in the parties’ positioning. The United States historically oscillates between its political parties. Elites can make economic progress when Republicans govern, by deemphasizing the social issues that win the votes and enacting the less popular economic agenda. When Democrats are in power, elites make pursue their agenda by emphasizing social progress while disingenuously lamenting constraints that thwart economic progress. Elites use our famous “peaceful transfers of power” not as signals to change direction, but as the zigs and zags that constitute a tack in their prescribed direction.

This is more an account of the past than a guide to the future. Hopefully it helps discredit the (silly) “too much democracy” theory prominent among elites to explain current political dysfunction. The electorate has spent decades swapping political parties and moving away from what, on average, it has wanted. The social extremity of the Trump coalition can be understood less as a discontinuity, and more as part of a reaction to the post-2008 discrediting of elite economic preferences. Emphasizing polarization on social rather than economic grounds helped avoid a dangerously “left but not woke” primary challenger among D-leaning voters (who live mostly in the left half of the graph), and also helped mobilize a dispirited, economically not-so-conservative base to turn out in an expression of social resentments among R-leaning voters (who live mostly in the top half of the graph). Both parties’ elites shared an interest in polarizing the countries across a social and cultural terrain, while de-emphasizing economics. But Trump turned Washington’s gurus into sorcerers’ apprentices, as their usually calibrated tweaking of social resentments gave way to a figure they increasingly cannot control, and of whose governance no sane American should approve.

In 2020, I am a bitterly disappointed either-Bernie-or-Liz guy. Nevertheless, I’ll be working to elect Joe Biden over Donald Trump this fall. But I do hope a new administration understands the stakes. You can’t not give the public what it wants over a period of decades and expect democratic forms and norms to go unscathed. In order to bring down the temperature of social polarization in the United States (which, perhaps marking me as a squish sell-out, I desperately hope we manage), elites will have to reverse their 2016 mistake, and give ground to the left on economics while trying to talk the country down (“unify”) from the social polarization that they themselves, in my view, quite cynically engendered.

Neoliberal desegregation

On bunch of housing-related issues, the United States is badly paralyzed. In aggregate, “we” would like things to change. We would like our housing (and with it access to public goods like high quality schools) to be less stratified by race and class. Many of us (although perhaps fewer mid-pandemic) think that on environmental, social, and economic grounds, we’d be better off if we built and lived more densely, sunsetting postwar US suburban sprawl for something more like the megacities of East Asia.

The pro-density agenda is controversial. But at least in theory, the desegregation agenda is not. Even in this moment, with its boogaloo warriors and the Fox-News-o-sphere shouting from a reactionary crouch as protests rage over racial injustice, pretty much no one in the United States overtly favors residential segregation. Yet almost all white Americans — not just hateful bigots on the right, but liberals, lefties, wishy-washy social democrats — tacitly engage in practices that reinforce that segregation. Bourgeois liberals apologize for the practice, we are not unaware, but once we have kids, we insist they grow up in “nice” neighborhoods with “good” schools, knowing and quietly exploiting correlations between both race and affluence and our scare-quoted notions of quality. One way people try to address this is to encourage (or shame) families into not insisting upon access to segregated public goods, or at least not relying on the correlations embedded in segregation to make their choices. I don’t think this is likely to be fruitful. Structural racism requires structural remedies. To use a much-too-dry, economist-ish analogy, families with the option of purchasing segregation as a visible proxy for high quality public goods are in a situation very much like a depositor in a (pre-FDIC) bank she believes to be sound, but that is facing an incipient run. She might be right about the fundamentals, but a bank run will destroy even a solvent bank. Participating in the run, withdrawing her funds, is antisocial. But failing to participate (by withdrawing early, while she still can) will cost her life’s savings, and won’t save the bank. The individual incentives to behave antisocially are too strong for it to be credible that everyone will spontaneously agree to do the right thing. And if (nearly) everybody will not do the right thing, doing it on your own yields little social benefit and a lot of self harm.

Obviously, the analogy here is not perfect. Our bourgeois liberal’s child may derive real benefits, not just costs, from being educated in a racially and economically diverse setting. (The most affluent families purchase slots in private schools that bus in a carefully selected, “safe”, diversity.) A bank either goes bust or not, but when a well-resourced family does choose to place their child in a less affluent, less lily white, school, there may be incremental benefits to other children and families. If so, each family’s individual choice to acquiesce to segregation as a proxy for public goods imposes an opportunity cost on kids and families who cannot make that same choice. On moral grounds, the case for condemning parents who seek predominantly white and asian neighborhoods as a proxy for safety and good schools is undoubtedly stronger than the case for condemning a person who gets out early during a bank collapse. But given just how starkly public goods like safety and educational outcomes are in fact segregated in our society, and given parents’ unusual solicitude for the welfare of their own children over other moral goods, I don’t think trying to remedy segregation by encouraging or shaming people one-by-one will do a lot of good.

We’ve tried some more structural approaches, most notably bussing and school assignment lotteries, both of which try to decouple residential segregation patterns from school quality. These approaches have not proved sustainable. For traditional beneficiaries of segregated public schools, these practices impose two kinds of costs. Their kids have to bear the cost policymakers intend to impose — sharing more broadly the public schools, and so bearing more of the costs and risks associated with the education of less privileged populations of students. But they also impose deadweight costs, like long bus routes and the quotidian challenges of pick-up and drop-off when home, school, and work may all be in entirely different neighborhoods. These deadweight costs create beautiful personal and political pretexts for rolling back the policies without feeling evil. Of course we support equal opportunity and desegregated schools. It just doesn’t make sense, though, that my kid should have to go to a school halfway across the city, when the school just a block from our home is much better! To sustainably remedy the segregation of public goods like education and public safety, I don’t think anything other than remedying the geographical and social segregation of humans will suffice.

Here I propose a very neoliberal approach to that. Affluent and especially white Americans segregate themselves because it is in their and their families perceived interest to do so. Individually, we face incentives to continue a centuries-old, self-reinforcing dynamic. But one thing neoliberal social engineering is very good at is flipping incentives. What if we literally paid people to integrate their neighborhoods, or taxed people who insist upon, or fail to remedy, segregation? We already have a property tax system. Suppose that for each point of residential geography, we computed the overall demographics within a circle extending for, say, 50 miles. Then we compute a metric summarizing the divergence between the demographics of the (very) immediate neighborhood and the overall regional demography. We provide a property tax refund in an amount that decreases with demographic divergence. Property taxes would become much lower in neighborhoods that are well integrated. Neighborhoods that are segregated would face higher property taxes. All of a sudden, the segregated themselves would face significant financial incentives to figure out how to integrate their own neighborhoods. In effect, we as a polity would be trying to purchase integration with tax credits paid directly to homeowners.

If you take the ugly patterns of contemporary America to be eternal and immutable, you might argue that this wouldn’t work. The public goods that affluent, especially white, Americans associate with segregation are extraordinarily valuable, so rich people would just pay up to keep the status quo unless the tax benefit for integration was implausibly large. I think this misses two important points. First, “affluent” America is not uniformly that comfortable or affluent. In most “nice places”, substantial fractions of residents have leveraged themselves to the hilt to buy their smallish-for-the-neighborhood home in that great school’s catchment area. Affluent America is now full of $1M plus homes. At current-ish tax rates, without going refundable, a full property tax credit could amount to more than $10K in savings every year, a pretty big deal for many people who struggle to afford “nice”. If we wanted to keep the scheme revenue neutral, we’d increase the base property tax rate to cover the cost of the integration credits, widening further the range of credits that could be offered. (And nothing prevents making the tax credits refundable, effectively offering a negative property tax for the best integrated neighborhoods.) There’s a real incentive here.

And for most of these people, I think there is not a real trade-off they would pay up for. Perhaps my glasses are rose-colored, but I think most families who participate in the dynamic that sustains and reinforces existing segregation understand the unfortunately accurate correlation between neighborhood demographics and public goods quality, but do not mistake those correlations for causality. That is they understand that, for bitter historical reasons, if you want to predict which neighborhoods are likely to be safe and have good schools in the United States, racial demographics are informative. But they do not believe that “whiteness”, for example, causes public goods quality, or that “blackness” diminishes it. Therefore, it should be possible to integrate ones immediate neighborhood without a cost in the quality of neighborhood-based public goods. Whenever a house in the neighborhood goes up for sale, existing residents would have a financial incentive to actively recruit diverse newcomers who they’d welcome as neighbors.

There are obviously things that are problematic about this. This recruitment would be quite similar to the way upscale private schools recruit their diversity. Race might not be causal of local public goods quality, but class plausibly is. The PTAs of “public” schools raise a lot of money from parents for “enrichment”. Students whose families lack social and financial resources sometimes require schools to do extra work to compensate, creating a burden. Affluent white neighborhoods would end up competing for the “nicest” (meaning richest, most bourgeois) black families to integrate themselves with. That’s tokenistic and ugly. But still better than the racially segregated status quo.

And of course, the financial incentives would not apply solely to affluent neighborhoods. In most of the United States, public goods quality is middling to poor regardless of racial demographics, but segregation is sustained by some combination of people’s modestly higher comfort level with their own groups and (hopefully modest) discrimination against outgroups. Direct homeowner financial incentives that favor integration could make a lot of headway in these neighborhoods.

It’s not only households of the segregated majority that could use financial incentives to integrate their neighborhoods. “Pioneer” families moving into previously homogeneous neighborhoods face challenges ranging from culture shock and unintended “microaggressions” to overt racial hostility. Under this proposal, pioneer families would effectively receive financial compensation for helping integrate a neighborhood, relative to purchasing a home of similar value in an own-ethnicity segregated neighborhood. And the proposals would give new families and their neighbors a shared, common, financial interest in making things work out.

Under the status quo, racist behavior by white homeowners is encouraged by a plain economic incentive: So long as affluent Americans use segregation as a proxy for pubic goods quality, any integration of a neighborhood reduces perceived public goods quality, and therefore home values as well. Conventional American homeownership is in financial terms a huge, undiversified, leveraged speculation. Homeownership overshadows all other investment for most families, and is for them the basis upon which any financial security rests. Under these conditions, it is not right, but it is also not surprising, that people with expensive houses prioritize maintaining home values above what should be more important social goods, like not being racist. A reduced property tax burden for integrated neighborhoods could offset this financial incentive. Property tax burdens get impounded into home values too. A property tax advantage for integrated neighborhoods would push home prices upwards, offsetting any price effect of integration on perceived public goods, especially over time as correlations between segregation and public goods quality (hopefully) diminish. Realizing the lower tax burden and higher home values would be a shared project for both new, integrating, families and existing residents of formerly segregated neighborhoods.

I’ve mostly discussed the incentives of homeowners, but if landlords experienced the same integration-dependent property tax schedule, they would also have a financial incentive to integrate their buildings. There are devils in details. Would those incentives lead landlords to violate equal housing laws? Should we modify equal housing law to permit practices that would diminish segregation according to our metric, so that landlords can seek to capture the subsidy, perhaps by sharing it with the pioneer families they’d seek to attract? There’s more to think about here.

Integrating disproportionately white, especially upscale, neighborhoods sounds like a worthy project to liberal American ears, but what about integrating disproportionately black or latino neighborhoods? Would an incentive designed to move every neighborhood towards a region’s average demography increase the threat vulnerable communities already face from displacement and gentrification? We value ethnic enclaves like Chinatowns, both as tourist attractions and living communities. Should we design incentives in a way that excludes these neighborhoods, because they reflect a form of segregation we’d prefer to retain? If so, should the same exclusion apply to Little Italys or traditionally Polish neighborhoods? Maybe it is upscale communities that most urgently, and least problematically, should face pressures to integrate. We could design a tax credit that only offsets property taxes above some threshold, so that poorer communities would not face financial incentives to integrate. Perhaps we’d simultaneously make the property tax progressive, so that owners of lower-value homes share some benefit. One advantage of a neoliberal, technocratic, thought experiment is it forces one to think pretty explicitly about values and tradeoffs, in order to translate them to formulas. (But a key disadvantage of neoliberal, technocratic policy is that often formulas are proposed and enacted while the values and tradeoffs they embody are largely inscrutable to the general public, enabling onerous values to get entrenched into law.)

We could use the same technique to purchase densification, if we as a polity agree that densification is something we want to buy. Right now, existing “homevoters” tend to favor neighborhood preservation over densification. Localities enact thickets of zoning regulations whose effect and purpose is to give neighbors veto power over new development. People like Elizabeth Warren have proposed offering Federal grants conditioned on localities reducing land-use regulation, on the theory this will create an incentive to permit densification. But that is not a great approach. It creates incentives for local officials to game the system in order to meet homevoters’ dueling preferences for more amenities (what Federal grants can buy) and continued restriction of new development. The likely effect would be a shift from status quo land-use restrictions to more tacit practices that still enable neighbors to veto projects but aren’t disqualifications for receiving grants. A cat and mouse game between density proponents and preservationist homeowners would ensue. A much simpler approach would be to define a property tax credit for neighborhood density. This would “flip the incentives” of (some) homevoters, from opposing new development to welcoming it. Local officials could then just do what these voters want. By adjusting the scale of the tax credit, and perhaps setting a threshold beneath which it wouldn’t apply, we could try to target densification towards more upscale communities so that it is less of an engine for displacement and gentrification.

Pandemic diary 2020-06-03: Mad world

I cannot not say that I think it is madness.

I think it is madness that the United States is engaged in a cycle of mass protest and suppression while in the thick of an uncontrolled deadly pandemic. Some of you are fond of imagining what the history books will say, after that subject’s long arc has finally run its course, about this or that policy atrocity. What will the history books say about people crowding into streets to protest or to suppress, people crowding into vans and buses to detain or to be detained, people crowded in holding cells as the detained, while a deadly respiratory virus travels from lung to lung to lung?

This is not to say that I blame the protestors. Predictably enough given my politics, if you ask who I blame I will blame the police. From my vantage, however unavoidably unrepresentative that may be, many police departments have responded even to peaceful (but disruptive) protests with escalation, rather than accommodation and protection. They have tried to suppress the protests rather than work with the great majority of protestors who do not condone looting and vandalism, but who do demand to block roads, to surround buildings, to exact a toll on commerce and convenience but not life and property. I worry, perhaps unfairly, that police have intentionally ignored or even encouraged crimes against property to serve as pretexts for aggression against peaceful protestors.

Maybe you disagree. Great. History will have its verdict there too (although we should never imagine that the verdict of history is God’s truth). But it seems to me we all have a common interest in finding some detente that would get us through the next year or so without crowding into streets and precinct houses.

I think “civil strife” in the US is overdue and unsurprising. In ordinary times, I would be sad and worried, but also hopeful that these convulsions might put us on a better path than the slow social collapse and rising stock market of the last decade. For me, watching it all, it is hard not to feel a chord of elation. Here finally is a new civil rights movement maybe strong enough, maybe serious enough, to actually remedy our national sin and so redeem us all. (Intellectually, there are problems with this theory. But emotionally the pull is strong.)

These are not ordinary times, however. The pandemic is not a plot laid by capitalists and racists to suppress the black, brown, and poor. Two weeks ago it was the capitalists and racists endangering us by pretending the virus was under control or no big deal. It was easy for me and people with my political sympathies to condemn that. Now we are… nuanced. Perhaps reasonably! You can argue (I’d quickly agree) that pursuing the cause of racial justice is a more important good to weigh in the balance against pandemic harms than a pool party, or getting to go to the gym. Less dismissively, you can point out that the miseries of business owners and unemployed people, many of whom have not been made remotely made whole, can be relieved without creating public health hazards by offering more generous public support, but there is no simple switch we can flip to end police violence and racism. Perhaps the social and political good these protests might do outweigh the harms at the margin they do to pandemic control. There’s a case to be made.

But let’s be conscious of the scale of potential harms, of the risks we are collectively taking, with “we” here including the protestors and the police in their codependent dance, people like me and perhaps you on the sidelines, encouraging one group or the other, public figures who could perhaps diffuse the situation, the public as a whole. Maybe the “reopeners” were right after all that the hazards of this pandemic are actually pretty manageable. Maybe the virus simply does not transmit very easily outdoors and in heat, maybe widespread mask-wearing dramatically reduces its infectivity, maybe loads of people can hang out outside, even chanting and shouting, if they do their best to stay masked when they are not chanting or shouting and at least six feet apart. Maybe the number of people getting arrested and dangerously confined is too small to make a dent in the pandemic, however dramatic it all looks on TV.

But maybe not. These are things we just don’t know. Jumping on them is accepting risks most of us thought premature when Georgia and Florida and Texas started “opening” a month ago (now we begin to see a mortality bump). This current cycle of current protest and suppression might prove not so terrible, epidemiologically speaking. Or it might prove really terrible. We don’t know. If it is really terrible, how really terrible would it be?

Astonishingly, miserably, your lifetime risk of getting killed by the police, if you are black and male, is about one in a thousand. That is a fucking crazy death rate, a blot and a stain and an ineradicable shame on our political community. At a moral level, nothing can minimize that or undo the grief and fear that black communities have and continue to live with. Mercifully, COVID-19 does not inflict the same degree of shame and anger upon us as police killings. It is, to a certain degree though not fully, an act of god rather than an act of man. But COVID-19 does inflict grief, fear, and death upon us.

Over just a few months, your risk of dying of COVID as a New York City resident was roughly two out of a thousand. [*] That is twice a black male’s lifetime risk of death-by-cop. That two-per-thousand death rate is lower than the true number for black residents, and especially black male residents, since the disease killed black and male disproportionately. As far as we can tell, maybe 25% of NYC residents were ever infected by the virus. (We think as of mid-April about 20% had been infected, but infections have been subsiding since then.) New York’s epidemic was belatedly suppressed. A resurgent epidemic could bring the death rates of five or six per thousand, and significantly higher for black men, to New York City and everywhere else.

Black lives matter, and the disproportionate dying by black men of COVID-19 is almost certainly caused in great part by the socioeconomic conditions that current protests mean to remedy. But the current protest/suppress/escalate cycle in the streets risks a whole lot of lives, black lives and other lives. It risks death at a scale of many years of police killings. Obviously, the cause of addressing racist police violence cannot be put on pause. But is there any way we can shift towards less risky means of pursuing it?

Even as a matter of politics, the pandemic tilts towards finding other means of pursuing justice. Always with disruptive protest, movements have to balance the effectiveness of visibility and pressure against the possibility of backlash and retrenchment. Often “risk of backlash” is wielded disingenuously, a classic rhetoric-of-reaction perversity claim. You, dear reader, will have to decide whether this essay falls into that category. In ordinary times, my views on this stuff are nuanced.

But consider the following scenario: A few weeks from now, while protests are ongoing, cases and then mortality really spike. For now, the public-at-large seems remarkably supportive of the protest movement. But if conventional wisdom comes to blame it for a reinvigorated epidemic and all the miseries that attend it, if the public (black and not) can be persuaded that “burn it all down” rhetoric translated into a wildfire of indiscriminate disease, the public sympathy that political progress requires may curdle into hard hostility. A nation convinced that a “hard left” or “black activists” hate America so much they recklessly or intentionally caused hundreds of thousands of avoidable deaths will not be fertile ground for justice or social democracy.

I am not saying that people should stand down now. Acts of violent suppression make it untenable for protesters to stand down. I am saying that the costs and risks of this form of political struggle, at this time, are dizzyingly higher than they usually are due to the pandemic (and even in usual times, the stakes are very high). I am pleading that all sides take into account the very real risk of mass death that attends the path that we are currently on, and find ways to deescalate from epidemiologically dangerous tactics without betraying causes and values that are inviolable.

I don’t know exactly what this might look like. Obviously I can’t speak for people in the street, or behind riot shields, or in the White House. But to be constructive, I’ll hope first that police revert to a strategy of accommodate, protect, and deescalate, that they strive to minimize arrest and detention (which we know are conducive to disease spread), that they enforce the law when people are engaging in actual violence but tolerate a broad range of civil disobedience that does not cause imminent harm. I’ll hope that the movements on the street coalesce around some set of very concrete demands that won’t be sufficient to remedy centuries of white supremacy, but that will address their most urgent concerns and allow them to declare this battle won. I’ll hope with Pat Robertson (really?) that public officials at all levels adopt a tone of conciliation and openness rather than militarization and threat. I’ll hope.

[*] I am using the raw NYC health department numbers, restricting to “confirmed” cases, using 8.4M as the population of NYC. I’ve seen reports of a five per thousand NYC population mortality rate, but I don’t understand how that is computed.

Update History:

  • 6-June-2020, 7:35 p.m. EDT: “…roughly two out of a thousand risk death by cop.” Thank you commenter Brian Slesinsky

Pandemic diary 2020-05-25: Two big questions

My broad take on the pandemic has been and remains pretty grim. Early on, I thought that after decades of prioritizing efficiency over resilience in our supply chains, the pandemic could lead to outright collapse. Gratefully, I think that less likely now, although the possibility is not off the table. It feels like we are in the middle of this thing, but by the numbers we are still in the beginning. According to serological tests in Spain, which has endured much worse mortality than the US, only 5% of the public has been exposed and should be expected to have some degree of immunity. If we take the infection fatality rate to be 0.7% (see a range of estimates here) and if we imagine — very optimistically — that only half the US population becomes infected before “herd immunity” sets in, then we should expect a toll of more than a million dead should we fail to suppress the epidemic.

So far we are “only” one hundred thousand tragedies in. Just the beginning. This is the thinking that places me squarely in the camp of coronavirus hard-liners. I think that we as a society should place a very high priority on infection suppression. For now that means people should either be at home, outdoors and socially distant, or carefully protected when performing essential work. (Whether that “should” needs to be legally enforced is a different question, which I’ll put aside for now.) We should reduce the burden of restricted lives with generous financial and social support. But we absolutely should not encourage people to return to restaurants, bars, theaters, malls, theme parks, gyms, or salons until we are capable of suppressing outbreaks (à la Korea, test/trace/isolate), or until we develop a vaccine or effective treatment.

Is my view wrong, harmful and overdone? One of the poles of our heartbreakingly polarized political system says it is. Restaurants, salons, and gyms are all open here in Florida, where my family is isolating. (Long story.) The benefits that a functioning service economy provides to customers, workers, and business owners are very real. The question is, can “reopening” be done safely? If it can be, to the degree we can reopen without accelerating infection, of course we should. But we should not undertake any reopening that would place us back on a path of exponentially increasing infection. So we come to the key uncertainty: How dangerous is reopening? Right now the US infection rate seems stable, even gently declining. But are we suspended by a delicate thread thousands of feet above a rocky canyon? Or are we held by a firm cable just a few feet above grassy earth? I don’t think we know. A month since states began to reopen, we don’t see much evidence of accelerating infection. Internationally, there has also been some loosening of restraints, without obvious remissions. Sweden, which has been among the least cautious developed countries both in terms of legal restraint and actual behavior, is seeing its (once very high) mortality rate decline despite remaining far from estimated herd immunity. Outbreaks in the developing world, thank god, have not so far been as severe as we might have expected, at least as we can imperfectly observe them. On the other hand, benign outcomes may be the result of continuing caution by the general public. Nowhere are service economies thriving. “Reopenings” are happening mainly in low prevalence places, drawing customers from currently low prevalence populations. But prevalence can change. As we continue to loosen restrictions (legal restrictions, or just restrictions on our own behavior), sparks that have so far died out may suddenly ignite. Some of our sort-of success may be attributable to factors like seasonality and mask-wearing, but both of those are in different ways temporary.

There are I think two potential explanations of benign outcomes that would really change how we understand the pandemic. But I don’t think we know if either of these explanations are true, which turns them into very big open questions.

Explanation I: The spread of COVID-19 is overwhelmingly driven by “superspreaders”, and superspreading is determined much more by behavior and circumstance than by the biology of the superspreader.

If it is the case that the vast majority of infecteds don’t spread at all, while the average number infected (R0) of roughly three is due to a few superspreaders that compensate for the nonspreaders, then preventing infection by these superspreaders could be sufficient to suppress the epidemic. If superspreading is mostly an invisible biological phenomenon, if some recently infected people just shed a whole lot more virus than others, this fact doesn’t help us much with “reopening”. Most of the time most restaurants will operate safely, but occasionally a superspreader will walk in, and unbeknownst to her or anyone else, infect half the room. However, if superspreading is less about biology and more about behavior and circumstance, then we can simply limit the activities during which superspreading occurs. We know indoor choir practice is probably an activity that risks spreading the virus, so we don’t do that. Superspreading seems associated with congregate living arrangements (prisons and god help us nursing homes), loud crowded workplaces (meatpackers), crowded indoor social gatherings, etc. We know that we need to protect or reorganize congregate living places and crowded workplaces — although disgracefully, we seem instead to be opting for a “herd immunity strategy within many of these settings. Following Japan, we could encourage people to avoid the “Three Cs”. We’d keep places like nightclubs and sporting events closed, open up but limit crowding elsewhere.

But this only works if less close, less crowded interactions really are safe. Definitively resolving this is a strong case for aggressively pursuing contact tracing by human interviewers. If infection is a matter of avoidable circumstance rather than an ineluctable result of prior infections (as it might be in simple models of “open”), then actually learning the details of the circumstances under which people became infected is our surest path to freedom. Are indoor restaurants mostly okay? How should we arrange the air conditioning? In our dismal, ridiculous, politics, contact tracing has become associated with Democrats who (like me) want to see the US pursue a South-Korea-style strategy and criticize the President for our botched test-and-trace ramp up. Contact tracing is therefore dismissed by Republicans, who argue that Korea-style containment is unworkable in the United States, so what’s the point? But Republicans eager to reopen should be especially devoted to contact tracing. Reopenings that prove catastrophic to public health will not help anyone, economically or electorally. Contact tracing with detailed interviews is how we learn to reopen safely, if it can be done.

Explanation II: Immunity not reflected by serology

Until a few weeks ago, a big open question was whether the coronavirus was spreading much faster than the disease we actually observed. This, oddly, was more a hope than a concern. If mild infection was in fact much more widespread than we knew, then infection fatality and severity rates — the fractions of people infected who die or experience severe illness — would be much lower than we thought. For individuals, it would mean the disease is less dangerous. In aggregate, it would “lower the ceiling” on mortality. (In the bad case where the epidemic runs its course, a lower infection fatality rates means a lower total casualty count.) We thought that serological studies would answer this question of unobserved spread, and probably they have. Using Spain as an example again, we’ve learned that for every infection we formally detect, roughly 9 people other people who were never diagnosed show antibodies. That may sound like a lot, but it was only enough to bring the infection fatality rate down to about 1%, which still would mean more than a million US deaths without suppression. Undetected cases would have had to be closer to two orders of magnitude more common than detected cases, rather than just one order of magnitude, to keep the death toll in the ballpark of a few bad flu seasons. According to the serological data we have so far, I think this hope is thoroughly dashed. Studies that suggested much more widespread infection, like the Stanford Santa Clara County study, have not proved persuasive.

A last ray of hope lies in the possibility that people who undergo very mild infections do not end up with reliably detectable levels (“titers”) of antibodies in their blood, but still end up with “memory” cells in their immune system that would let them ramp up production of antibodies and specialized T-cells quickly if they were re-exposed to the virus. In other words, there may be people who have a degree of immunity that is invisible to our antibody tests, so that despite our serological disappointments, the true infection fatality rate is lower than we estimate. This is pure hope: There is no evidence that I know of for this idea, beyond circumstantial handwaving about ceilings in the levels of mortality per population we’ve observed so far, which more likely reflects a successful behavioral response than a speculative immunological one. This unobserved immunity hypothesis stands on the less persuasive side of a war between parsimony and hope. Nevertheless, I’m willing to hope.

But I think it’s the wrong call to bet people’s lives on this kind of hope until we have some evidence for it.

Pandemic diary 2020-05-05: Segregation cannot set you free

A few days ago, David Frum offered this extraordinary conjecture:

I don’t think the President and people like Governor Kemp are consciously planning this, but they’re removing all the alternatives to the only policy that is going to remain this time six weeks from now or eight weeks from now. Which is they’re moving toward the policy of what’s — “let’s take the punch.” He’ll reopen and see what happens. Let’s accept that there may be hundreds of thousands, or some double hundreds of thousands, of Americans killed. They’re going to be mostly poor and minorities, mostly not going to be Trump voters. Let’s take that punch and push through and try to get to herd immunity as fast as possible.

I don’t think the President quite processes it quite that rationally, but maybe Governor Kemp does. I suspect Governor DeSantis probably does. But that’s where with they’re going.

There’s lots to say about this. In the short-term, the strategy Frum describes is self-defeating. If affluent people don’t emerge from isolation, “reopening” won’t do much to revive the (dollar-weighted) service economy. We’ll still be saddled with the same ugly economy, but with a higher prevalence of the disease, rendering it even harder to sustain the supply chains of essential goods even Trump’s base relies upon. If the red-state affluent do emerge, the “punch” will be taken in significant part by Republicans’ base after all, and they may not like it.

But also, there’s an error in this thinking that transcends the heavily memed frontier between red and blue. It afflicts affluent Americans broadly. It’s hidden in that phrase “herd immunity”.

We have all heard that “herd immunity” may set in once, say, 60-70% of the population have been exposed to the virus and so (hopefully) immunized. The logic is simple: If R0 is 3, then once two-thirds of the public have been infected, two of the three people a new case would have infected will now be immune. So they’ll infect only one to take their place as they recover, stabilizing rather than increasing the infected population. Once more than two-thirds are immune, on average they’ll infect less than one person, causing the infected population to decrease over time rather than stabilize. Cool.

Affluent Americans of all stripes I think are quietly mulling something like this: It’s a terrible time, and tremendous death and suffering may be inevitable. For all kinds of reasons, we as a country may not be able to “crush the curve” and adopt South-Korea-style social distancing. Maybe it’s just impossible, given the extent the disease has spread and Americans’ general unruliness. Maybe it’s not worth the cost, in dollars and liberty, of living several years in a kind of quiet stage-managed by public health bureaucrats. So maybe acquiescing to “herd immunity” before a vaccine will have to be the way forward. We could get lucky! Maybe asymptomatic spread is much more than experts estimate, so the infection fatality rate is low. Maybe much of the population is immune already, genetically or due to cross-reactive antibodies from common-cold coronaviruses. But we have to be prepared for not getting lucky, in which case more than 200M Americans would become infected, and (under current estimates of an infection fatality rate of ~0.7%) more than 1.4M would die.

But even in that case, some significant fraction the country — say 25% to 33% — need never become exposed, need never risk this game of Russian Roulette where even “winning” may involve suffering and disability. If my family can isolate, comfortably and so diligently, if we can place in the top 25% of isolation diligence, then we can hold out until enough other people have risked and suffered and died that we can emerge safely. If, sadly, herd immunity before a vaccine is inevitable, then why delay acquiring it? Shouldn’t we race there as fast as we can, subject maybe to the constraint that ICU capacity should not be outstripped? The people who are going to be exposed will be exposed anyway, but at least they’ll not be unemployed as long. And the people capable of isolating most diligently would like to be (safely) free of their diligent isolation as soon as possible, thank you. So, as Frum describes it, let’s (let them) “take the punch”.

Segregation is affluent America’s go to coping mechanism. There are always horrible things going on “over there”, whether over there is a famine in Africa, a war we are prosecuting in the Middle East, or poverty and violence in West Baltimore. The first amenity Americans seek as they grow affluent is a “nice neighborhood”. As a nation, we describe ourselves as blessed by the protection of our two wide oceans. As families &mdash if we are affluent, especially if we are white — we understand that we are protected by more subtle boundaries. Maybe that’s a sad injustice, maybe it’s because we’ve earned it, choose your poison and your political party. But whatever it is, we are used to it. It’s not surprising, when we read that COVID-19 has hit poorer communities, black communities, immigrant communities disproportionately. It may not be right, but it’s the way of the world, and whatever our political or ethical attitude, affluent Americans tacitly rely upon it. Manhattan, denser but whiter and richer, has less than half the COVID infection rate as the Bronx.

But the segregation that so often protects affluent America this time cannot free it. Remember how herd immunity works? If R0 is 3 and more two-thirds of the population is immune, then an infected infects less than one replacement and the virus dies out. But that assumes a uniform draw: the three people a new case would have infected are randomly chosen from the population, and at least two of them turn up immune (on average). But if the population is segmented, segregated, stratified, that won’t be true at all. Herd immunity might be achieved in the Bronx, but over in Manhattan, most of the privileged will remain immunologically naive. If you want to ride out the epidemic without exposure, it’s not enough to be in the top 25% to 33% of the most diligent isolators in the United States, or even in New York City. You have to be one of the top 25% to 33% of diligent isolators in your own community, among the people you interact with. If you are an affluent person who lives in a desirable neighborhood, who if liberated would work in a tony office, your implicit competitors in the coronavirus virginity game are not meatpackers or transit workers, but your neighbors and coworkers. And that’s a much tougher league. They have resources comparable to your own, or maybe better. The game of mortal attrition could last a long time. Months or years after the transit workers have taken their punch, your little world could still be ripe for an outbreak, if you all come out to play. So you won’t, not until there’s a vaccine or you are compelled by circumstance. Segregation will have helped to protect you, as it usually does. But this time, it will also imprison you.

So, if you are affluent, in a comfortable isolation but eager to escape it, don’t imagine that “hard men” like Governors Kemp or DeSantis are, however regrettably, accelerating your liberation with a herd-immunity strategy. They may think they are, but all they are in fact doing is risking the supply chains that your comfort and our political order depend upon. And, of course, putting lives of the less affluent, as precious and valuable as your own, needlessly at risk. But, though we fret, those lives seem to weigh little in our political system. Maybe if the affluent understand that “taking the punch” will not protect or liberate us, but may risk food shortages, outrage, and rebellion, maybe that will weigh more.

Four functions of markets

Perhaps, perhaps, this crisis marks an end of the “neoliberal era”.

The word “neoliberal” immediately provokes contention, but let’s not get fancy or upset here. For our purposes, neoliberalism is just a set of social heuristics: 1) that markets are in general the most capable institution for organizing human affairs; 2) that therefore, absent strong reasons to the contrary, use of market or market-like institutions should be maximized, “completed”, expanded even into domains heretofore intentionally insulated from them; and 3) that other institutions, including the state, should take a supportive, even subservient role: filling in gaps (“safety net”), addressing “market failures” that are presumed to be rare rather than pervasive, and only when a high burden of proof has been met. Any other intervention is a “distortion” to be avoided at all costs.

I think it fair to describe the period from about 1980 until the 2008 financial crisis as a neoliberal era, a period of time during which these social heuristics were widely accepted by governing elites and policy, in the United States and the broad West, was informed and shaped by them. The period from 2008 until now has been a kind of undead neoliberal era. Post Great Financial Crisis, neoliberal ideas have been discredited among much of the public and are actively contested even within governing elites. But, absent consensus on some new set of social heuristics, not much has actually changed. Material interests in the continuity of institutions shaped by neoliberalism remain strong.

Continuity now is broken. When this pandemic is “over” (whatever that means), the undead bones of neoliberal governance may well yet again gather themselves from the chaos and reconstitute the suave, smooth-talking vampire to whose predations we have grown unhappily accustomed. But they may not. We may find ourselves in a period of social experimentation and change. If so, as we diminish (not eliminate!) the role of markets, it is useful I think to understand the variety of functions that markets serve, so that framers of new institutions understand what will be excised, what may sometimes need to be replaced. So. Here are four functions of markets:

  1. Markets serve as Hayekian information processors
  2. Markets naturalize outcomes, defusing social conflict
  3. Markets “flip the incentives” surrounding resource utilization
  4. Markets launder history

Obviously, the list is not exhaustive.

I. Markets serve as Hayekian information processors 🔗

This is the function of markets that economists emphasize. Voluntary exchange plus a price system compose into a massively decentralized calculating system for allocating and distributing resources. Individual units (households, firms) need know or compute very little to participate in a gigantic computation that, ideally, ensures scarce, highly sought, resources go to where they are most needed (because the most-needers are willing to pay their high price), and are most eagerly produced (because those capable are eager to receive the high price). No formal match, no central tabulator is required, because any unit’s choice to purchase puts upward pressure on prices which in theory ripple immediately to everyone, and any unit’s choice to produce and sell has the opposite effect. Widely dispersed information about preferences and abundance are continuously summarized in a price vector while goods and services flow between units with no central coordination at all.

There are a lot of problems with this story. For one, “need” gets operationalized as purchasing power, so under conditions of inequality, the calculation yields an allocation of resources not to where they are most needed, but to whom is the richest. If producers or consumers have market power, they can rig the computation towards self-serving, socially destructive ends. Even under conditions of near equality, the informational case for markets declines as market institutions are transplanted from real commodities (which really are subject to diverse, widely dispersed preferences and availabilities) to more abstract settings (financial capital, health insurance) where preference diversity is not actually so great (people participating in capital markets are mostly trying to make money, humans who might get sick similarly want effective and pleasant care as cheaply as possible) and information is more asymmetrically held than widely dispersed (insiders and professionals know more about stocks than dispersed potential buyers and sellers, insurance buyers cannot really evaluate and compare 200 page contracts that implicate but omit thousands of negotiated prices).

Nevertheless, the sphere of real goods and services is not insignificant. Distortions of inequality may corrupt the computation for big city real estate but leave the marvels of a grocery store mostly intact. Markets really can function as Hayekian information processors. It really is remarkable how, despite a lot of consolidation and predation, a massive range of goods and services gets produced and distributed across huge geographies, among consumers and firms with extraordinarily heterogeneous requirements, pretty damned well under market institutions.

II. Markets naturalize outcomes, defusing social conflict 🔗

Adam Smith famously described market outcomes as “led by an invisible hand”. Of course, markets are social institutions, and market outcomes are made by human hands, sometimes myriad and dispersed, sometimes centralized among monopolists or rule-makers. In any case, to market participants, it is usually not obvious who decided the outcomes, or that there is meaningfully such a “who” at all. “Market forces” shape our fortunes and misfortunes, rather than identifiable human beings whose judgments we might appeal.

In the same way, for the same reasons, we respond very differently to a terrorist attack than to an even more devastating hurricane, many of us accept unfortunate market outcomes as things we just have to deal with, where had some identifiable individual prosecuted the same harm we might contest it, demand compensation, even engage in retaliatory violence. Market outcomes portray themselves as facts of nature rather than acts of man. In any social system, events and institutions will lead to outcomes that create winners and losers. A hundred families want to live in a building with room for only twenty. Some will get a spot, some won’t. If some politician dictated the allocation, the losers might get mad, might even try to get even. If the losers are “priced out”, well, that was just supply and demand, baby. Market forces. Whaddayagonnado?

This trick of markets doesn’t always work. In fact, the senescence of the neoliberal era corresponds not coincidentally with its working less and less. When it seems like identifiable parties controls market outcomes, we describe the market as “rigged”. Market outcomes are no longer perceived as natural, and those on the losing end become inclined to contest them. A decade ago, the resolution of the Global Financial Crisis created a lot of winners and losers in a manner that was widely, and accurately, perceived as politically determined (even as the winners, just before and again now, portray themselves as skillful participants in a free market). No one except perhaps Jamie Dimon attributes JPMorgan Chase’s success or continued existence to the dispassionate operation of an invisible hand. Over the past decade, growing awareness of inequality, along with widening gaps across social fissures of geography, race, and profession, have increased the degree to which “market losers” perceive themselves as victims of self-interested action by identifiable classes, rather than individuals caught by misfortune in the economic equivalent of a hurricane.

That this trick of markets is not now working so well does not mean it is dispensable. Our society is not now functioning very well. The collapse of markets’ ability to effectively naturalize outcomes and render them immune from political contestation is precisely the collapse of the legitimacy of a neoliberal order. But any system of large scale social coordination is going to require action that creates winners and losers, often arbitrarily, and will require some means of legitimating those actions, of preventing the natural and inevitable unhappiness of losers from translating into attacks on the system of coordination that render it unworkable.

“Democratic legitimacy” is the most commonly posited alternative to markets’ naturalization of outcomes, but I think that both in practical and moral terms, it’s an insufficient answer. There are no perfect democratic institutions, and ours are particularly imperfect. Losers often perceive government actions that thwart them as usurpations of rather than expressions of the “true will of the people”. If democratic legitimacy is defined in majoritarian terms, all of us I think would agree there can and have been actions supported by majorities against minorities that should not be deemed moral or legitimate. Democracy matters, a lot. It does contribute to losers’ willingness to tolerate actions with disparate impact. But to recover social contentment, we’ll either need to improve our democratic institutions so that outcomes are more universally perceived as legitimate, or we’ll need to find new tricks that replace markets’ depoliticization and naturalization of tough cookies. Probably we’ll need a lot of both.

III. Markets “flip the incentives” surrounding resource utilization 🔗

Where market logic has not yet penetrated, people’s incentives are usually to hoard utilization of resources they possess. Households with a guest room leave it empty most of the time. Private cars sit idle most of the time. From an owner’s perspective, this “underutlization” is rational. Letting other people use your resources is costly, in terms of wear and tear and risks of damaging misuse. Further, possession of idle resources confers option value. Your empty guest room would not be available when your friends swing through town, if you used it to house a homeless person. Your idle car is always there for you when you want or need it. You don’t have to call a cab and worry about when it will come or the price of your ride.

If we let markets infiltrate households, we can flip these incentives. If you AirBnB your guest room, all of a sudden you spend hours on the website futzing, trying to ensure that bed is occupied almost every night. If you start driving for Uber, your car will no longer be so idle. The same logic holds for capital goods as households. If you happen to own a big, street-level space in a city, without markets, you might use it to host occasional parties, or as an art gallery, or who knows? But once there is a market for commercial space, you’ll rent it to a highest bidder who likely will ensure it is used quite intensively, in order to make the rent.

This “flipping of incentives” is important, economically and environmentally. Economically, intensive use of a resource by many creates more value in aggregate than very occasional use by a single party. (Even much of the option value can be retained, albeit split between provider and customer, if access is priced so that usually there is some slack.) Environmentally, intensively shared resources can have a much smaller footprint than widely replicated, infrequently used resources. (If 10 households can be served by one Uber, we could build a lot less cars by Uberifying.) There are nuances. If the shared resource is very far away (e.g. one intensively run factory in China), the environmental costs of transportation at least partially offset the smaller footprint. And the intensive, “efficient”, resource use encouraged by status quo markets often comes at a cost in resilience, as we are learning too well during the current pandemic. Many underutilized, “redundant” resources are less likely to fail or become unavailable all at once than a very few fully utilized resources. Perhaps successor institutions to status quo markets will better balance redundancy and efficiency.

The most important resources for which markets “flip the incentives” are, well, us. Where markets are not very extensive, the burden of collaborations falls very heavily on people who want something for which they need assistance, rather than the people who could provide the assistance. As markets develop, this burden flips. In the beforetimes, your farm lacks a blacksmith, but larger farms have them, and your horse needs shoeing. So you wander to a neighbor and ask for help, negotiating compensation ad hoc or relying upon a spirit of reciprocity. As markets develop and specialize, blacksmiths become independent, competitive businesses who advertise and post prices. Perhaps touts even pester you as you trot by, hoping you will let them provide.

In less developed markets, we conserve our time and skills like we conserve other resources that we own. As markets develop, incentives emerge to keep our time and skills heavily utilized. Most of us are ambivalent about this. As consumers, we don’t love to be pestered by marketers. As producers, everpresent consciousness of “opportunity costs” can poison our creative and family lives. Nevertheless, this shifting of burdens from consumers to producers dramatically increases economic activity, and so prosperity by conventional measures, and I think prosperity in a real sense as well. Left alone, consumers want only occasionally. But producers produce most efficiently when they produce consistently and at scale. With the help of marketing (and macroeconomic policy), they strive to engineer want for the goods they efficiently produce.

On the one hand, this is the kind of treadmill many of us hope to escape with some retrenchment of neoliberalism. But on the other hand, I don’t think we want to escape too far. Overall we are better off in a world where our incentives are to seek to do one another favors, rather than a world in which need is the dominant incentive and we have to beg favors not eagerly provided.

For now, institutions that are insulated from market incentives, in particular government institutions, often do not have these incentives flipped, and that is a problem. As I write, millions of people are struggling to get unemployment benefits to which they are entitled from states (e.g. Florida) whose incentives were to make access difficult, not easy. Much of the conventional disdain for “bureaucrats” comes from a sense that they are people with no great reason to help us when need their help or at least their acquiescence. If the operators of Florida’s unemployment system had been rewarded for ensuring that every eligible beneficiary got their check, rather than for minimal outflow of state funds, that bureaucracy would probably behave quite differently. When politicians say governments should be “run like a businesses”, they mean lean, cheap, and efficient. But what appeals to most citizens in the phrase, I think, is that they should be accessible, helpful, and eager to please. As we pull back from neoliberalism, in part by tilting away from markets and towards governments as coordinators of our affairs, we should find ways to “flip the incentives” of state actors. One great use of a job guarantee corps would be to train up humans eager to serve as bridges between busy, distracted citizens and the governments who might serve them — basically taking a role as salespeople, but for the state.

Our political resentments play out mostly in national affairs, but antigovernment animus builds up mostly locally I think. Small businesspeople especially become jaded. They face a daunting range of risks related to local codes, registration, tax, and employment. Compliance, they are told, is their responsibility, the entrepreneur’s burden alone. Talk to owners of restaurants or small retail establishments in major US cities and you’ll hear horror stories of having to pay tens of thousands to one of a few architects able to get paperwork through city hall in order to renovate and open, of new investment demanded to bring a kitchen up to code when the prior tenant had just been operating with the same kitchen, of penalties for violating regulations they hadn’t realized existed, of getting shut down for zoning violations that make no sense at all. Whether you are on the left or the right, a neoliberal or social democrat, these just aren’t good things.

Regulation and compliance are essential, especially for dense cities. But helping people manage compliance ought to be a function of the state. If a restaurant kitchen needs better equipment to come to code, that becomes the restaurant’s property, and of course it should be purchased at the restaurant’s expense. But the process of bringing an an expert to inform the restauranteur of what their requirements will be in order to come to code ought to be a public function, rather than a domain of expensive specialists. Regulations exist to ensure valuable activities are conducted in ways that contribute to the public good, not to discourage those activities, or restrict opportunity to the very well capitalized. Spurred by “flipped” incentives, market producers routinely work to absolve customers of regulatory burdens. Car dealerships hire specialists to render the bureaucracy of a loan application almost invisible to customers, because they have an interest in the purchases overcoming that burden helps to enable. Government actors should face similar incentives. Large swathes of professions that now expensively, extractively manage compliance — law, accounting, finance, architecture — should migrate into the employ of states. Professionals should be rewarded both for quality of compliance and quantity of activity they enable. If you have a hare-brained idea for a business, City Hall should invite you in and offer you a coffee, just like a salesman at the car dealership. At both enterprises, most of those encounters will be “waste”, but the overall result will be well worth it.

It’s not obvious how to design effective public-sector institutions with flipped incentives. Neoliberal politicians have frequently attempted cargo-cultish, superficial mimicry of businesses, like having government employees refer to the people and businesses they interact with as “clients” or “customers”. That’s… not it. As the neoliberal moment hopefully recedes and we come to rely more on state coordination, this is a problem we should try to solve.

IV. Markets launder history 🔗

A crucial function of status quo market institutions is to hide details surrounding the provenance of commodities, which contributes to the interchangeability or fungibility of commodities. Apple can shift the location of its production across the globe, but from a customer perspective, the only input to the process is their money which is transformed, as if by magic, into an iPhone. Outside of market processes, nothing is like this. When we produce goods for ourselves — “cottage production” as the economists call it — every item has a history. The coffee table Dad built is not the same as any other coffee table, even if it is physically not so different from some other table. As markets develop, firms try to reconstitute this kind of nostalgic, positive history, using labels like “hand-made” or “artisanal”. These attempts not very persuasive.

However, the history of commodities is not always positive. When our credit card dip magically transforms into an iPhone, it is the same iPhone whether the cobalt inside it was mined by well-treated workers or child slaves. Like Vietnam vs China vs the US, these “back ends” are interchangeable, except to the degree that one makes the product cheaper, which we prefer. But human beings are moral animals. No aspect of our experience is naturally immune from our judgments, individually and communally, and judgments have huge effects on our behavior and experience. We might not enjoy our shrimp dinner, if rather than pulling the shrimp from plastic in the freezer, it was delivered to us directly by the trafficked crewman who may have harvested it. We might feel bad, and that might impair preference satisfaction.

This function of markets is obviously essential to our neoliberal status quo. Innocuously, it allows producers the flexibility to alter and improve the internals of ethical production processes without fragmenting markets. It’s for the best that an iPhone 8 be an iPhone 8 regardless of where the screen was produced. It simplifies exchange and contributes to efficiency. The producer’s brand becomes the only history that matters, and the producer has an incentive to ensure that, however dynamic and heterogenous the details of production, the consumer’s experience is uniform. Even where we understand production processes and regard them as ethical, too salient an awareness of their history might impair our enjoyment of a product, so in a sense make us poorer. We all understand what a sausage factory is, and have some idea of why we famously might prefer not to observe one. But we all know, even if we don’t live like we know, that in fact there’s a lot of history in the goods and services we consume we’d at least be ethically squeamish about. As I write, the Federal government has just effectively coerced meatpacking workers to labor in manifestly unsafe workplaces, in the name of preserving our food supply. How should that affect our relationship to bacon? How does it, when our experience of the packaged, refrigerated product is mostly unaltered? In ordinary times, lots of us are fond of animals but do not become vegetarians. If we were required to personally kill the animals we eat, many of us would enjoy our carnivore lifestyle quite a bit less. Again, the abstraction markets offer make us richer, in the sense that we enjoy what we otherwise would not. Okay, maybe that’s gross, and we should all be vegetarians. But then what do you think about the conditions under which migrant workers harvest our garlic?

There is a case for this laundering of history. Modern production processes are complicated, involving a many stages and circumstances, each of which involves tradeoffs, conflicts, and shades of gray. If we tried as individuals to police all that, we’d do a poor job in an ethical sense and make ourselves poor in a practical sense. Instead we outsource the ethical choices to state regulation of production and trade. Then so long as commodities are produced and sold in legal markets, every purchase comes with a dollop of absolution. Individually, we might not all agree on the choices the state makes, but hey, this is a democracy right? On the whole, the theory goes, our choices will be more effective when they are collective and enforced, rather than if we tried to rely on more perfectly individualized consumer judgments, boycotts or such. So ethics as well as expedience are on the side of this arrangement.

Of course if neoliberalism is defined in part by an attitude of state subservience towards markets, perhaps, in a neoliberal era, it should not surprise us if expedience came to eclipse ethics. Many of us now think that modern supply chains are sexy Apple packaging wrapped around horrifically ugly production arrangements, and that legal and financial markets often serve to wrap theft and extraction in pretty paper bow ties. This “function” of markets is part of what motivates us to challenge them. But it remains to be answered how much and just how we might want to retain the blissful ignorance delivered by virgin commodities. Inscribing all the history markets erase on a blockchain or whatever, and then relying on individuals to evaluate the ethics of every stage of production of every good and service they consume, does not seem workable or effective. On the other hand, if markets launder history too well, that short-circuits the capacity of democratic politics to insist upon ethical production, as voters are shielded from the harms of cruel supply chains but enjoy the benefits of lower prices. Some variant of the status quo, where ethical choices are collectively made and enforced by states, seems like the only way forward. (Perhaps I am too uncreative?) It’s one thing to speak abstractly about retrenching from neoliberalism, with its corrosive effect on collective action in pursuit of moral ends. But what, concretely, do the political institutions and processes look like that would render it ethical for us to enjoy the goods and services available for purchase as though they had no history? What would be the trade-offs in what we perceive as prosperity if we instated those institutions?

Update History:

  • 3-May-2020, 2:10 p.m. EDT: “in a price vector while good goods and services flow”; “…if markets launder history too effectively well, that…”